SEGA announced a new partnership with PROPE, Ltd., a new video game development studio based in Tokyo, Japan. PROPE, Ltd. will develop original content for the next generation consoles.

Effective June 1, 2006, Mr. Naka will leave his post as Creative Officer for Research and Development at SEGA Corporation and will become CEO and President of PROPE, Ltd. Mr. Naka has been the creative force behind such SEGA brands as Sonic The Hedgehog and Phantasy Star. SEGA will make a 10% investment in PROPE, Ltd. and will be the company's exclusive global publisher. This landmark announcement between SEGA and Mr. Naka is the first arrangement to emerge from SEGA's Game Creator Independence Program, which will be organized to promote entrepreneurial business spin-offs with its internal development talent.

"We named our company PROPE in the hopes of bringing game entertainment much closer to users, establishing closer ties between users and us, and creating near future entertainment," said Yuji Naka, CEO and President of PROPE, Ltd. "I am looking forward to the challenge of embarking on this new entrepreneurial venture supported by such a powerful global publisher as SEGA."

"Mr. Naka is an incredible industry visionary and as SEGA continues to align itself with top development talent, we are extremely excited to partner with PROPE," said Naoya Tsurumi, Chief Executive Officer, SEGA of America, Inc. and SEGA Europe, Ltd.

The agreement is the latest in a string of similar announcements from SEGA that underscore the company's increased emphasis on external content development. Previously, SEGA announced partnerships with developers Obsidian Entertainment, Silicon Knights, Bizarre Creations, Monolith Productions (Condemned: Criminal Origins(TM)), and Pseudo Interactive (Full Auto(TM)). SEGA also acquired development powerhouse The Creative Assembly (Total War series) in 2005 as well as US developer Secret Level and UK based studio, Sports Interactive in 2006.

"PROPE" (pronounced "pro-pe") is a Latin word which means "beside" and "near" future. Future information for PROPE, Ltd. will be announced on their website at http://prope.jp